Making changes to student loan repayments 'costs a lot of money,' warns Skills Minister

The number of UK school leavers accepted on to degree courses has risen to a record high this year, Ucas figures show.

A total of 262,820 UK 18-year-olds have gained a place at university or college – up 3% on the same point last year, according to data published by the university admissions service.

Yesterday, the Conservatives called for Andy Burnham to cap student loan interest at inflation as measured by the UK Retail Price Index (RPI). Kemi Badenoch announced this policy, arguing that it would save graduates tens of thousands of pounds. The Tories have also said they would scrap university courses that leave graduates “saddled with debt and with no job prospects” and reinvest savings in more apprenticeships.

On Thursday morning, Nick Ferrari asked Baroness Jacqui Smith about the Conservative Party’s suggestion.

She responded: "Anybody who's going to University now on what we call the Plan 5 system, these repayments are already capped at the rate of inflation. It's for those in Plan 2 loans, so in their late 20s and 30s. We know that interest rate is a concern.

"That's why we've already capped it at 6% for this, for this coming year. And of course, we will want to look at the ways in which we can support people in those repayments.

However, she admitted: "I have to say, it costs a lot of money. We have to make decisions about how we're going to spend that money.

"I want for us to be able to invest, as we are, more in technical education and in apprenticeships, and we've already done that.

"But as Lucy Powell has already said, we will of course look really carefully at this to make sure that people who are repaying their student finance are able to do that in a manageable way."

As students collect their results, Baroness Smith urged young people to consider the path best suited to their strengths.

She said it was important “to think about what it is that really lights your fire, if you like.”

“If you have done really well academically on your A-Levels, it may well be that going into University is absolutely the right thing for you to do. If you learn better by perhaps earning and learning at the same time, then think about an apprenticeship.

“There are brilliant higher level Apprenticeships now on UCAS where people can find information about apprenticeships. And the job for me is to make sure that whatever young people feel their strengths are, they've got the opportunity to take those routes.

“So one of the really important things that Andy Burnham's been talking about is how from the age of 14 we can make sure that there are also strong technical routes for those young people who think to themselves, ‘I learn better perhaps by working with my hands or by applying knowledge’, let's say, to the digital world that is increasingly becoming important, and that there are routes and qualifications that those young people can follow as well.”